Gotham Gazette , August 4th, 2006
How Candidates Get Away With Above-The-Limit Contributions From Rich Donors
What can wealthy and influential New Yorkers do when they have contributed the maximum $50,100 to a statewide candidate this year? They can create a “limited liabiltiy company” or LLC and help pump more money to their favorite candidates’ campaign coffers.
The NYTimes reported on the unscrupulously common way for candidates (and donors) to subvert the already weak state campaign finance laws by creating these companies – business entities that are relatively easy to establish (requiring about 1 to 4 hours) that give owners, well, limited liability as well as enormous flexibility. Additionally, here in New York, according to the State Board of Elections contributions made by these companies are treated in a similar fashion to individual donations (carrying the maximum total contribution of $150,000 in a calendar year) instead of corporations that may contribute up to a total of only $5,000 yearly. (Individuals may also contribute through a limited liability company.)
One way to plug this gaping hole in the state campaign finance law is to introduce public financing on a statewide level. During the 2005-2006 session, the Assembly majority passed a comprehensive campaign finance reform Act, A0004-b, which reduces contribution limits, closes various campaign finance loopholes and provides optional public financing of statewide and legislative offices. This measure died in the Senate, while Senate minority member Liz Krueger introduced such legislation (S.1668) which never made it out of the Elections Committee. Despite the inherent inaction of the the Legislature, the newly elected governor in 2007 should take the lead on reform and introduce meaningful improvements to the state campaign finance laws.